Taxi companies file suit against Uber and Lyft

Taxi companies in Houston and San Antonio took their turf war with two online companies to federal court Tuesday, saying Uber and Lyft are operating illegally and skimming money from taxi firms that abide by the law.

The lawsuit, filed in U.S. district court in Houston, asks a federal judge to declare the companies are violating city ordinances in Houston and San Antonio by accepting payments for taking riders to destinations.

Trips generated by Uber and Lyft – which connect interested riders with willing drivers via smartphone apps – have led to 26 citations in Houston; 15 were issued to drivers and the rest to the companies.

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The number of citations for accepting payment has jumped in recent weeks, leading taxi companies to file the lawsuit, lawyer Martyn Hill said. It became clear, he said, that the citations hadn’t discouraged the two companies from operating and accepting payment.

Hill said city penalties aren’t strong enough to keep the companies from violating strict rules that govern taxi companies and drivers.

“If I could run a bar and all I had to do was pay a fine for $500 for not paying taxes, I might still run the bar and pay the fines,” Hill said. “That’s what’s happening here.”

Uber had not seen the lawsuit, spokeswoman Nairi Hourdajian said, but planned to continue operating.

“As they see the demand for services like Uber in Houston and they see city officials taking an informed look at the services, they are taking desperate measures,” Hourdajian said of the taxi and limo companies. “Their time and energy might be better spent improving that service.”

She said courts have repeatedly ruled in the company’s favor. In Dallas, the city took the company to court accusing it of advertising an illegal limo service, Hourdajian said.

“It took a jury 10 minutes to bring back a unanimous verdict,” Hourdajian said.

Texpatriate notes some other suits that have been filed against the newcomers. I’ll talk about this more in a minute, but first here’s a story from the weekend about those citations.

As city officials consider changes that would permit two new companies to permanently enter Houston’s paid-ride market, the companies continue racking up citations.

Uber and Lyft – which connect interested riders with willing drivers via smartphone apps – have been issued a combined 11 citations for improperly charging for rides. Drivers have been issued 15 citations since the companies launched locally in late February.

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In a letter to city elected officials Wednesday, regulatory affairs department head Tina Paez said 26 citations had been issued thus far, 15 to Uber or its drivers and 11 to Lyft or its drivers. City officials are making efforts to serve the citations levied against the companies – six against Uber and five against Lyft, Paez said.

“Uber and Lyft do not have registered agents in Texas and will need to be served in California,” Paez wrote. “Once served, Uber and Lyft will have two options: Pay the fines or go to trial.”

Twenty-six is not a whole lot. For some context, I reached out to spokespeople for the two companies to ask them about their ridership numbers in Houston so far. According to them, there have been over 20,000 rides via UberX, and five thousand via Lyft. Now obviously enforcement is dependent on the number of enforcement officers out there, but still that’s a pretty high trip-to-ticket ratio, and I don’t know that I want a swarm of cops out there policing ride sharers – surely there are higher priorities than that. The number I’d really like to know is the volume of cab rides since February, and how it compares to previous months and to the same months a year and two years ago. A lot of people have been using Lyft and Uber, but how much of that is coming out of the cab companies’ hides, and how much of it is new volume? I’m sure some of it has come at the expense of the cabbies, but it would be nice to know how much. If their decline is significantly less than the number of rides that Uber and Lyft have provided, then I’m not sure how much sympathy I have.

I will say that I have a copy of a taxi demand study in Seattle, conducted after the entry of ridesharing companies and provided to me by a representative of Lyft, that shows an increase in demand for limo services and a flat demand curve for traditional taxis, which goes back well before the newcomers’ entries. It may well be that the effect on Houston’s cabs has been minimal. (Here’s a copy of the taxi study done for Houston that was to be discussed with Council yesterday.) I’m sympathetic to the concerns about Lyft and Uber skirting the law, and I agree with Texpate that Uber’s overly aggressive email campaign has been off-putting. Pretty much every city these companies have entered, there have been complaints about how they have gone about establishing themselves and interacting with local governments. Be that as it may, I’m not sure how this is a matter for the courts, and I’d like to know what the cab companies say their losses are. And yes, I’m ready for Council to put this to bed.

One Response

I heard same kind of issues that happened in chicago, shanghai and even more major cities. Uber and lyft are just providing a online based service, so taxi companies who installed these ride sharing services should take care of drivers.